By Catherine Austin Fitts
If you follow market commentators, one of the themes you are hearing a great deal about is the question of what, exactly, is going to cause the stock market in the developed world to continue to levitate, let alone move higher.
Digging in a bit this translates into questions of how corporate earnings are going to keep going up and whether the P/E Ratio of corporate stocks is going to remain high, even go up as well.
Corporations are sitting on a pile of cash. True, much of it can not be repatriated without big tax bills. One of the corporate challenges is that improved earnings have been created by laying people off. As consumers income falls, they stop buying as much from corporations. And now Obamacare has wiped out an entire swath of domestic income.
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So corporations have been buying back their shares. When you have nothing worth investing in, you can invest in your own stock. And big plans are afoot for whole new rounds of automation. Amazon drones will be flying to your doorstep. Merger activity will pick up. But still we need more than just buying each other and replacing more people with machines.
Enter The Economist this week with a bright red cover announcing that governments in the developed world should privatize assets. Ahh, I said, this is how we are going to generate a “big shift” of government subsidy to create a new round of fresh corporate earnings.
The academic definition of privatization implies a transfer of assets at market value. However, the history of privatization has been a transfer at below market value that offers windfalls to private corporations at government expense. (For a few sizzling examples, check out my article The Myth of the Rule of Law)
If a privatization wave gets going – and I expect it is likely – get ready for another big shift of windfall profits into corporations. There is going to be so much wrong afoot that I could spend pages listing the particulars of the inversion of sound economics involved.
Alternatively, I could also just add, HERE WE GO AGAIN!
